TPA Slams Supreme Court for Online Sales Tax Ruling

WASHINGTON, D.C. – Today, Taxpayers Protection Alliance (TPA) President David Williams expressed disappointment at the U.S. Supreme Court’s ruling that allows states to require all internet retailers to collect sales taxes.

“The 5-4 decision breaks with 50 years of precedent that kept states from mandating that out-of-state retailers collect sales taxes from their customers,” Williams said. “This ruling opens the door for any state to tax any business that simply wants to use the internet to gain a foothold in the national market.”

SCOTUS ruled in 1967 that states couldn’t require mail-order catalog companies to collect sales taxes unless its buyers lived in a state where those companies had physical presences. The Court said such companies would face issues too complex to adequately determine correct sales taxes, given the wide disparities in rates across the U.S.

Williams continued, “The previous SCOTUS ruling allowed states to collect sales taxes from businesses with a physical presence within their borders. The nation’s largest retailers such as Walmart, Amazon and Best Buy were already collecting taxes to pass on to states. But today’s decision will require small internet businesses to navigate through a labyrinth of 10,000 local taxing jurisdictions across the country.”

Williams concluded, “The scope of the ruling is wider than one might first imagine. Consider the average eBay seller – they now has to deal with the taxation issue. eBay warned that putting the internet sales tax in place will result in ‘crushing burdens on small online businesses, causing many to curtail operations and damaging the national economy.’

Congress should act swiftly to pass legislation that would prevent states from taxing these small businesses that don’t have physical presences within their borders. A return to the previous status quo would halt the harm that today’s ruling could have on American entrepreneurs.”